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India concludes 3G wireless auction with record $18 billion in bids

After 19 days and 115 rounds, an auction of third-generation (3G) wireless licenses in the 800 MHz, 900 MHz, 1800 MHz and 2100 MHz bands ended last week in India with record bids of nearly US$18 billion. The final bid tally of $17.6 billion is 36% higher than initial government estimates and was touted by Communications and IT Minister Ravi Shankar Prasad as “the highest ever in [the] history of India.”

Out of the eight bidders that qualified to participate in the auction, three—market leaders Bharti Airtel, Vodafone and Idea Cellular—competed to retain existing license rights as well as to gain access to additional spectrum resources that would boost their ability to provide wireless broadband services. Idea Cellular, the nation’s third-ranked wireless carrier by revenue, posted the highest bid total of $4.8 billion. Bharti Airtel came in second with a bid total of approximately 290 billion rupees ($4.6 billion) that was followed by Vodafone’s third-place bid tally of approximately 260 billion rupees ($4.2 billion). The fourth-highest bid total of $1.6 billion was submitted by upstart provider Reliance Jio Infocomm, which won rights to 1800 MHz and 2300 MHz licenses in auctions conducted last year and in 2010.

By April 8, auction winners are required to complete upfront payments that amount to 25% of their total winning bids for licenses in the 800 MHz and 900 MHz bands and 33% of the posted bid total for licenses in the 1800 MHz and 2100 MHz bands. (The balance is payable in ten annual installments.) Despite his company’s success in the auction, Vodafone India CEO Marten Pieters voiced concern with the debt load incurred by the auction participants as he lamented that “the industry should first have been allowed to do what it’s supposed to do: deliver broadband and connectivity before being charged so heavily.”

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